Social Return on Investment (SROI)

Objective framework to measure investment impact on lives

Philanthropic decision making and assessment has historically been a subjective exercise and donors are increasingly seeking new methodologies for evaluating the impact of their social investment. Recipient organizations, too, are striving to address the perception of self-reporting bias by developing methods to answer the oft-asked question: "How do you know?"

We employ the use of quantitative methods, well known and utilized in other disciplines, to philanthropic decision making and grant assessment. While subjective input will never (and should never) be eliminated from social investment decision making, our aim is to augment the process by placing these subjective inputs within a more objective framework.

CALCULATING SOCIAL IMPACT VALUE

In calculating Social Return on Investment (SROI), one seeks to measure the impact on the lives of individuals as a result of an initial dollar investment. Although social impact is generally viewed as a qualitative measure, SROI methodology allows for the quantification of social impact into a dollar value in order to measure the effectiveness of philanthropic investment.

With a quantified social impact value and a known initial philanthropic investment, SROI can be calculated as:

Assigning a dollar value to the social impact of an intervention is accomplished in two ways:

• The Analytical Hierarchy Process (AHP), a proven mathematical methodology that converts and organizes qualitative information into quantitative values, in this case, dollars.
• Similar to the life insurance industry, annual income is used as a basis for life impact valuation. Sector experts are consulted to further calibrate valuations. We call this our expert consensus-driven approach.
  

SROI calculations can be done on both domestic and international projects and done on an ex ante basis and on an ex post basis as a project matures.

SROI Example

Kuzuko Game Reserve, South Africa